Supreme Court Rules Against Software Patents

SAN FRANCISCO -- A Supreme Court decision today may affect the technology industry for years to come. The justices' unanimous vote in Alice Corporation Pty. Ltd. v. CLS Bank International renders software patents ineligible as abstract ideas. Such ideas, the court said, have always been patent ineligible.

The Australian company Alice International had obtained patent protection for software that creates a settlement between two parties and generates instructions to the institutions involved to carry out their agreement. The justices ruled that the software was generic and did not make technical advancements or improve how the computer functioned.

"The patents at issue in this case disclose a computer-implemented scheme for mitigating 'settlement risk'… by using a third-party intermediary," Justice Clarence Thomas wrote in the court's opinion. "We hold that the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fails to transform that abstract idea into a patent-eligible invention."

Open-source advocates such as the Electronic Frontier Foundation (EFF) called the ruling a step in the right direction to curb patent trolls and improve consumer experience.

"We think that it will cut down on a lot of the worst patents that are out there, the most ridiculous and overbroad software patents… A lot of patent trolls' patents are now more questionable then they were," EFF staff attorney Daniel Nazer told us. "I think maybe there will be more of a focus on trying to create products people want and putting them in the market place rather than fighting each other with patents."

Though patents have been hotly debated as both detrimental instruments and catalysts for innovation, industry analysts said the ruling doesn't change much or provide a rubric for patentability. Those seeking patents will have to figure out what constitutes generic software and what is actual invention.

"Those applying for or defending software patents will argue that their inventions are not 'generic' computer implementations of abstract ideas," Florian Mueller, an analyst following patent disputes, wrote in a blog post on the Supreme Court ruling. "Those challenging such patents will try to define 'generic computer implementation' as broadly as possible and argue that every software patent they attack involves previously known computing technology and an abstract idea."

Patent attorney Jeffery Frazier told us that whether the ruling will deter patent trolls is up for debate. "People that draft applications are going to think around these lines and include language that sounds like there's an improvement made."

Nazer expects "wide and narrow interpretations" of the ruling, as well as the invalidation of many software patents. Still, the ruling "doesn't purport to be a decision invalidating software patents." Trolls will likely continue to operate, but they will try harder to avoid court rulings.

Language around the ruling may be cause for concern among hardware engineers. The term "computer-implemented" refers to the mode of invention, rather than the invention itself. Frazier said system elements such as a data storage unit and communications controller were called out in the case as generic, but they were only named at a high level.

"It concerns me a little bit. I'm sure it was the right thing to do here," he said. "Don't see it eroding patents on the system side or creating problems for hardware manufacturers. My concern is more trying to figure out where the line is. How far down from the high level that these claims were reciting do these hardware elements become tangible?"

The ruling was issued nearly a year after the Patent Litigation and Innovation Act of 2013 was introduced in the House of Representatives. Julie Samuels, then a senior staff attorney for the EFF, wrote in a blog post in December that the bill "gives defendants tools to fight back, makes litigation cheaper and includes an important fee-shifting provision."

The bill cleared the House and garnered support from President Obama, but Sen. Patrick Leahy (D-VT) removed the bill from the Senate Judiciary Committee agenda last month.

"The full contours of this decision will take some time to work out. The Supreme Court has left a lot of work for the lower courts to do to interpret it," Nazer said. "It's going to be 2-3 years before we have a good understanding of what the decision will mean in practice. But this is promising. There's a lot of good language here."

I agree the title is somewhat misleading as it relates to the case that is being discussed in the article and NOT at all for software patents in general (which are not granted in many countries). The supereme court already went past the machine-or-transformation test in the well-known Bilski vs. Kappos / State Street bank case as others also quoted below. It left the tough part to the patent applicant and the examiners to exercise rigorously the patentability clauses under sections 101, 102, 103 & 112 in USPTO's MPEP. The arguments made from each side in the interpretation of these sections to the patent application in question holds the key whether that patent gets approved or not. It seems to me that this process has not always been objective with USPTO when you see some patents that get away with outrageous claims!

The title of this article, as well as at ther very least the opening paragraph are seriously misleading, if not outright incorrect. The ruling by the Supremes pertains only to the particular software covered by the Alice Corp. patent. In particular former USPTO Commissioner of Patents Davis Kappos states "From the perspective of the parties involved, this week’s Alice Corp. v. CLS Bank decision held that a process that lessens settlement risk for trades of financial instruments is too abstract for patenting. However, to the leagues of interested onlookers holding their collective breath across our country and indeed around the world, the Supreme Court’s unanimous ruling subtly conveyed a much more significant judgment: software, as a class, is every bit as worthy of patent protection as any other medium in which innovation can be practiced." See http://patentlyo.com/ for further discussions and comments.

Operating Systems are not abstract ideas like a push button that represents a way to interact with the system (remember abstract window toollkit), that's we missunderstood of a patent, applications are abstract ways to represent a property of an artifact that consumes resources or allocates them, software creates an interface with hardware in the most pure form, which is patentable because it's a physical artifact, software systems are complex tools that represent not an abstract idea, but a ***physical***description of a processor, that can be a digital signal processor, or a logical inference machine system like a type system that analyzes an abstract machine (the program) in a logical inference machine from the point of view of how a real machine must be executed under program control, so it gives the control steps for a program, and so it's part of the operating system. Unfourtunately typeless programming languages such as assembly or other languages can't control at any point of it's execution that and depend on human control which is not something patentable, so computers in general sense are not patentable because they don't represent a useful trustable artifact for society unless they are correctly defined and automatically checked, As systems depends in all cases of a power control unit, such device is patentable and it's biggest headache for system designers

IMO the most intelligent decision on the "software patents" issue was Diamond v. Diehr, which as I understand it (IANAL) stated that software could be patented as part of an invention that passed the "machine or transformation test". That is, the invention as a whole had to be a particular machine (not a generic computer, though it could have a generic computer as a component) or it had to transform matter in a tangible way. In Diehr, the patent was for a rubber curing process so it involved a tangible transformation.

Unfortunately, Bilsky and now Alice have muddied the waters, replacing the fairly simple and concrete "machine or transformation" test with whatever "abstract" means to the courts.

Personally (again, IANAL), I see that the US Constitution states that the purpose of patents is "to promote Progress of Science and Useful Arts". IMO each patent awarded should clearly show that its award in fact promotes Progress and not the opposite. IMO too many patently ridiculous patents are awarded, and their presence gives their owners too much opportunity to retard Progress of Science and Useful Arts.

IMO, the only time USPTO should award a patent is if the invention is something that took a great deal of time and/or money to develop, but once discovered is cheap and quick to copy. This is never the case with software -- if it takes a lot of time to create the original software, creating a duplicate from scratch would take approximately the same time. Sure, someone could copy the binary, but then they'd be infringing copyright. For software, IMO copyright is plenty of protection.

RTL-based inventions are an interesting question. Here's my IANAL opinion: while in some sense an FPGA is like a general-purpose computer, in most cases it's part of a specific machine so the overall machine can be patented under Diehr, and this would allow the RTL to be patented for that specific machine. OTOH, if the FPGA is a generic component of a generic computer, such as the FPGA in Bunnie Huang's open-source Novena laptop, then IMO it's not a specific machine and RTL written for it would be like software and not patent-worthy.

>> Don't we in the tech industry think of hardware and software distinctions as blurred these days? A chip is several lines of RTL code.

For digital systems, Yes. For analog systems, NO. However with time the software will eat more of the hardware. The fact remains some of the coolest ideas are evolving out of software and in that case, that is the best place to be. You can have the best hardware but only the best software will make people connect and see the best in it

>> I think that patents are necessary to prove the product of an individual or an organization.

No, patents do not prove anything. It is more of a commercial vehicle than a technology tool. It offers exclusivity which provides incentives to innovate. I support patents but I hate the way it works at the moment because if Pythogoas, Euclides etc had all patented their equations, we may not have modern science as we do today

This will start the debate on what can be patented and what not. I guess its a tricky situation for software and hardware systems. But whatever is the case patent lawyers and engineers will always remain busy.